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Making the Case for Platforms (Warning: Explicit Math)

In some recent posts, I’ve discussed the values of platforms over campaigns.   For those of you just joining us, platforms, or brand-owned spaces that foster long-term engagement with customers, offer an economical alternative to acquiring and re-acquiring customers via Facebook and Google.

Today, I’d like to discuss the economics.  There will be math.  I am not above putting pictures of puppies in this post to keep you engaged.

I will stop at nothing to get you to pay attention to numbers.

The basic equation shouldn’t hurt; you need to compare costs to build and maintain the platform against expected customer value over a relevant time period.  I have no hard-and-fast figures for any of the above.  As always, the devil is in the details.

Costs to build and maintain

Costs fall into two categories: costs to create the platform and costs to drive consumers to it.  Creative costs vary as widely as the forms they take.  These costs depend mostly on what the marketer intends the platform to do, which in turn depends on what’s right for the audience.  Figuring out platform functionality–and hence creative costs–will probably take up the lion’s share of strategy development time due to the open-ended nature of building a platform.

Driving customers to the platform, aka acquisition, also represents a substantial cost.  Yes, despite all I’ve written about turning away from campaigns, I will now discuss why platforms require campaigns.

Puppy reminds you to think about a cost per action model!

A platform won’t grow customers all by itself.  Just as with any other marketing tactic, marketers need to make sure their audience knows about it for it to succeed.  That said, bear in mind that the platform will have lower acquisition costs than, say, a campaign designed to sell something.  A relevant platform offers something useful or entertaining to the consumer, something of immediate value.  A timely article or a fun mini-game will have broader interest than a straight sell.

Expected customer value

Acquisition costs nothwithstanding, platforms ultimately must drive some measurable value such as sales.  Direct brands and retailers have no problem here since they can usually connect a visitor to a sale easily.  Other brands in sectors such as consumer packaged goods, automotive or consumer durables have some more math to do, especially in terms of attribution.  The same goes for direct or B2B brands that don’t rely on digital channels to close the sale.

In short, how the hell do you correlate activity on a cleaning tips app to sales of a washing machine?

It’s not “attribute,” it’s “attri-cute!”

As Bob Dylan would have said had he gone into marketing, “the answer my friend, is proxies.”  Well, he might have said it, at any rate.  Marketers need to find good proxies for purchase behavior.  Let’s use the cleaning tips app and imagine our client is GE appliances (disclosure: they were a client of mine before GE sold them off).  GE appliances could push a coupon through the app or encourage new purchasers to register their new appliances via the app.  From this proxy, GE appliances could use the cost of the appliance or some derivation thereof as the yardstick for value.

Relevant time period

Marketers can’t measure a platform’s success in the same relatively short time period that they might use for a typical campaign.  Platforms engage consumers at different points of their journey, so results may not happen in the near-instant time frames associated with digital campaigns.

As a starting point, the time period for measuring platform success should correspond to the customer journey in some way.  On a recent platform project for an automotive brand, for instance, I used three years as a period of measurement because three years represents a typical (if short) ownership period for a car.  For the appliance example above, ownership periods represent too long a period to wait; people hang onto major appliances for more than a decade!  Instead, it might help to look at a length of time related to the purchase cycle.  A typical CPG, on the other hand, has the opposite problem.  People replenish their pantries and supply closets weekly.  As a result, the measurement period might represent a typical timeline for a customer to go from new customer to brand-loyal customer.

That wasn’t so bad, was it?  Now, let’s talk long-term lease depreciation.

I’ve sketched out the math for platforms in very broad terms.  Hopefully, you can use this math as a framework for evaluating ideas that will allow you to break your brand’s dependence on the digital duopoly.  If not, I hope you liked the puppy pictures.

So You’ve Painted Yourself into a Corner

Some articles by marketing strategists expand your horizons and render your giddy over the endless possibilities of our craft with soaring language and sparkling analogies.

This is not one of those articles.

Instead, this article focuses on one of the more grind-it-out aspects of our trade: what to do when you’ve got to provide strategic input for a purely executional project.

Rise and grind, kids.  Rise and grind.

You know the type: you have to direct your creative team to complete a very prescribed set of display ads, emails or social posts to meet a specific set of objectives, which usually boil down to clickthroughs, even if objective focuses on branding.  More often than not, someone else, perhaps at a different agency, has finalized the brand strategy and creative idea, aka “the fun part.”  More to the point, this project may not actually make sense to you.  For instance, in the above example about objectives, clickthroughs do not serve as an effective proxy for branding.

Or the task may involve picking existing creative assets to fill a role they weren’t designed for.  You’ve got the proverbial hammer all right, but none of the problems looks like a nail.

I liken this situation to the proverbial “painting oneself into a corner.”  It doesn’t matter what color you’ve used; you’re stuck.

Here’s the secret: don’t think of it as a chore, think of it as…ah, who am I kidding?  It’s a chore all right.  However, that doesn’t mean you can’t stretch your strategy muscles and make something as good as can be.  Hell, maybe you can even make it fun, as long as you have a flexible definition of fun.

Let’s assume “do something else” isn’t an option.  I’ll admit that I’ve often taken “no” for an answer when I could have pushed back a bit.  Mea culpa, but mea cupla minima as I’ve learned the hard way that pushing back ends badly more often than not.

Instead, try this approach:

    1. Clarify objectives and metrics.  Go over both thoroughly with the client or client manager.  As the strategist, you have to be clear about them even if the powers-that-be aren’t.  Pay close attention to any disparity between objective and metric, such as the branding/clickthrough inconsistency.  You better believe that when it comes down between the two, the metric will matter more than the objective.
    2. Find the most likely key.  Here’s where you earn your kibble.  Use whatever you can to establish which factors drive the metric that matters most.  In the best case scenario, you have previous results that you can parse for clues.  Fire up Excel and look for anything that you might compare.  These comparisons might include the basics (segment, offer) and any and all creative factors (headline/subject line length, call to action copy, image content).
      Unless you have really huge audiences, you’ll probably end up with anecdotal evidence.  But that’s better than nothing.  By the way, if you do have nothing, raid whatever you can for insight, including the overall brand brief, customer research or even insights pulled from competitive or desk research.
    3. Build your brief around the factors that emerge.  Present those factors to the creative team as puzzle pieces.  Encourage them to think of themselves as beating the brief; finding the tricks that will make the whole thing work.  Then let ’em rip.

 

While we pride ourselves as strategists and planners by our ability to weave together the whole cloth of new brands and platforms from the frayed threads of consumer insight, business requirements and cultural trends, we still have to pay the bills.  In this case, paying the bills means writing the quotidian briefs and offering the quotidian feedback on the long tail of client relationships.  Rise and grind.

Amazon’s Customer Strategy: New HQ Edition

At the beginning of the summer, I posited that Amazon bought Whole Foods not as part of a distribution or merchandising strategy but rather because they wanted to cater to the mass affluent consumer.

Now that Amazon has begun the great HQ2 competition, I’d like to take a moment to extend the mass affluent factor to geography.  In other words, where would Amazon build its second headquarters if they wanted to keep the mass affluent consumer in mind?

At first glance, this question seems irrelevant.  After all, Amazon already sprawls across this country with major offices in places like Newark, NJ and Grand Forks, ND.  Myriad distribution centers fill spaces in between.  They once got me a router the same day I ordered it in NYC from Kentucky.

That said, companies often relocate to get in touch with an audience or a workforce.  Many car manufacturers have design HQs in Southern California to take advantage of the region’s car culture.  GE recently announced a move of their headquarters from Fairfield, CT to Boston to attract workers interested in a more cosmopolitan environment (or maybe because GE likes Harvard better than Yale).

So where would Amazon put HQ2 if they wanted to immerse themselves in mass affluence given that they want to avoid the West Coast and such wealthy citadels as Silicon Valley, Santa Barbara and Palm Springs?

Don’t try to make it here

I’ll cross New York City and environs off the list first.   Continue reading

Baseball’s Foreign Policy: Where is It?

With baseball’s All-Star Game taking place next Tuesday, I wanted to weave together two frequent topics in my blog (baseball, social awareness) and ask a question: why doesn’t Major League Baseball speak up more about current events overseas?

For those of you keeping score at home, Venezuela has descended into near anarchy.  Violence has become a standard political tool.  Their free-falling economy threatens reach Weimar Republic levels.  A renegade policeman commandeered a helicopter to attack the Supreme Court with grenades, perhaps as a false flag attack.

Meanwhile, MLB, currently home to over 70 Venezuelan players, has not made any statements I can find to address the situation. Put another way, about one-in-twelve men who pull on an MLB uniform comes from Venezuela and, presumably, still has family there.

Miguel Cabrera, Venezuela’s top export now that oil prices are low

Just after President’s Trump’s inauguration, I wrote about the need for every business, even one as small as mine, to have a foreign policy.  Given MLB’s efforts to popularize the game overseas, you’d think that goes double for them.  Already, some Venezuelan players have spoken out via social media and other channels.

I realize that MLB does not dictate foreign policy in Latin America in the way that, say, the United Fruit Company did.  MLB clubs have largely closed their baseball scouting operations in the country, thus depriving them of on-the-ground influence.  However, they can still lead positive change in the country.  If I could share a nice, cold cerveza Polar with MLB commissioner Rob Manfred, here’s what I’d suggest:

  • First and foremost, use the upcoming All-Star Game as a platform to talk about Venezuela.  The game will take place in Miami, the de-facto capital of Latin America, especially affluent Latin America.
  • Offer mediation help.  While it’s tempting to recommend that MLB support the disgruntled opposition, I can’t ignore the harm it might do to families left behind.  That said, MLB has deep experience in mediation both at the micro scale (negotiating player contracts) and the macro scale (labor agreements).  If she weren’t otherwise engaged, I’d recommend Justice Sonia Sotomayor, not just because she speaks Spanish, but because she settled the last baseball labor action.
  • Support players’ social media activities.  Consider using MLB and MLB TV resources to amplify what they have to say, especially in international channel.

I reached out to the Commissioner’s office to see if they had anything to say.  However, they’re rather busy with the All-Star Game festivities, so they didn’t get back to me.  I’ll share if they do.

More Lessons from the Stripe Life

A while ago, I shared some things about marketing that I’ve learned refereeing my kids’ soccer matches.  I wanted to add one more: how and why to spread the work across multiple channels and campaigns.

Soccer pitch with referee running routes; also candidate for a really cool flag

See that big orange S-shape in the middle of the pitch?  That’s roughly the route that the center referee (CR)–the boss on the pitch–runs during a match.  Those red and blue lines that each follow half the sides of the pitch?  That’s where the assistant referees (ARs, formerly known as linesmen) run.  This setup gives the officials reverse angles of play on either end of the pitch.

Last weekend, I worked as an AR with a CR who simply ran along one side of the field, the same one I was on.  Thus, during any play on my end of the pitch, the CR and I had either the same view or, worse, she blocked mine.

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More Clear-Headed Thinking by the French

This weekend’s election in France suggests that the French electorate may have a firmer grasp on sanity than those in the UK & US.  A recent article in Automotive News, however, suggests that they have a firm grasp of marketing fundamentals as well.  Like a latter-day Alexis de Toqueville, it might have taken the French to reveal something about America that we Yanks didn’t know ourselves: how to sell pickup trucks.

Lafayette, we are here, y’all

Nissan, which is owned by Renault plans to launch its heavily revised pickup truck one region of the country at a time:

The automaker is focusing its marketing and distribution efforts for the Titan on just four U.S. cities — Dallas, Houston, Phoenix and Salt Lake City.
“We’ve concentrated on only those markets at first,” said Christian Meunier, Nissan North America’s senior vice president of sales & marketing and operations. “And once we’re satisfied that we’re where we want to be in those markets, we will then move to our second phase.”

You could argue with kicking off in the Mecca and Medina of pickup trucks, Dallas and Houston; it might have made sense to build up to these key markets rather than to start in them.  However, give the French some credit for taking on the most notoriously loyal vehicle segment in a strategically sound manner.

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How to Market a Boring Product, Part II

Continuing our discussion about marketing boring products, I wanted to take a moment to discuss the hidden challenge of marketing a particularly boring product, life insurance.  That challenge takes the form of something most people anticipate with great excitement: retirement.

Coming soon to a theater near you: “Geezy Rider”

Read part I here.

Retirement, aka “economic irrelevancy”

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How to Make the Most of Zombie Time

In my last post, I recommended that strategy teams spend 10% of their time–uncompensated by the client–looking for challenges that most marketers don’t even know exist.  I call this concept “zombie time” as a nod to the book and movie “World War Z,” in which we learn that Israel anticipated the zombie apocalypse because they routinely assigned intelligence analysts to imagine the unimaginable.

So, assuming you haven’t received training from Mossad, how do you do that?

To begin with, it helps to have a knack for asking stupid questions.  So, as Shock G used to say, “let’s get stupid!

shockg

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Absolutely, Ridiculously, Gratuitously Off-Topic

I’m just going to dive right into this one: I’ve thought more than any sane person should about what car I’d want to drive in a post-apocalyptic world.

I can’t help it.  My condition stems from the double whammy of a 1980s adolescence replete with nuclear hysteria (Mad Max, The Day After, Ronald Reagan) and an incurable itch to own a cool extra car.  If I could monetize wasting time on eBay Motors looking at old junkers, I’d scoff at the people who won a billion in Powerball.

Of course, not all apocalypses are created equal.  Oh, no.  Of course not!  If you had planned for an environmental catastrophe and found instead that you had awoken to a zombie outbreak, you wouldn’t be caught dead, so to speak, in a vehicle that could cross lakes but couldn’t mow down a passel of the formerly living.

So let’s dive right in.

Scenario: Unspecified chemical catastrophe blotting out the sun and denuding the Earth of all living things

As seen in: The Road

Preferred vehicle: VW Beetle (type 1) Continue reading

Schroedinger’s Cart

As a blogger, I try to cover a lot of ground in marketing and marketing data.  My posts range from how-tos to POVs to the occasional bit of humor.  And then everyone once in a while, I like to go completely “out there” and tackle a marketing issue with a decidedly off-kilter approach.  This will be one of those times.

Lately, I’ve been thinking about how people shop, both in-store and online, and it’s given me some potential insight into how marketers might be able to develop more appealing experiences for customers.

Behold, Schroedinger’s Cart:

table-208323_1920

No cats were harmed in the creation of this extremely arduous pun

Physics Nobel Laureate Erwin Schroedinger (or Schrödinger, if you must have the umlaut) famously posited a thought experiment about a cat in a box.  Schroedinger asked the reader to imagine that a a random event inside the box would release a poison gas and kill the cat but that the outside observer would have no idea whether that random event occurred.  He famously asserted that the cat was both alive and dead until the observer opens the box.

This is ridiculous, of course.  Except this thought experiment perfectly describes how we often shop.

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